Detangling the web of special ed funding

Pennsylvania’s special education funding is guided by a bewildering tangle of formula-driven payment policies. A system that virtually everyone agrees is outdated and inequitable recently has been modestly reformed for district-run schools, but not for charter schools.

As a result, charter schools continue to receive more per-pupil special education dollars than their district-run counterparts – dollars that those charters don’t have to spend on special education.

Here are three of the main issues that the charter school law generates:

School districts have limited special ed budgets, but charters can make unlimited demands.

When a charter determines that a student needs special education services, it triggers an automatic per-pupil payment from the student’s district, which must pay out of a limited fund provided by state formula. If the district’s state funds don’t cover the special ed costs of its charters, the district must make up the difference from other sources.

The costlier a district’s own special ed students are, the more it must pay charters.

In a strange quirk of charter law, district payments to charters are calculated based on what the district pays to educate its non-charter special ed students. If low-cost special ed students (such as those needing occasional speech therapy) migrate to charters, the higher-cost students left behind in the district (such as autistic children) drive up the district’s per-pupil costs – and therefore its payments to its charters. That’s one reason the formula has dictated that Chester-Upland should pay charters $40,000 per special ed student, while spending only $16,000 for each of its own.

Charters can spend special ed money on almost anything.

State charter law does not require charters to spend special ed money on special education. It can go to staff, administration, management fees or almost anywhere else, guided by little or no outside oversight. According to an analysis by the Pennsylvania Association of School Business Officials, the state paid charters about $350 million in 2013 for special education services, but charters spent only about $156 million on special ed – leaving what PASBO calls a “windfall” of almost $200 million. Charters in Philadelphia accounted for about half that amount.